This is the final trading day of the month and the first quarter. The
Dow Industrials posted a gain of 1.5% for the quarter, and the S&P
500 was up 0.77% for the quarter. The Nasdaq composite had its worst
first quarter since 2009 with a 2.75 percent quarterly decline.

All
three major averages recovered from an intra-quarter drop of more than
10 percent. The Dow Jones industrial average saw its biggest quarterly
comeback since 1933. For the month of March, the Dow gained 7%, the
S&P 500 was up 6.6%, and the Nasdaq was up 6.8%.

April is usually a positive month for stocks, and the S&P 500 has
been positive 70 percent of the time since 1945, ranking it as the
second-best month, after December. But in the past 10 years, April has
been the top-performing month. The S&P 500 companies are expected to
see a decline of 6.9 percent in first-quarter earnings.

If you are looking for reasons behind the rebound in equities, you
might consider the central banks. In the Eurozone, ECB president Mario
Draghi unleashed his QE bazooka. In the US, the Fed couldn’t pull the
trigger on a follow-up to its December rate hike; earlier this week
Janet Yellen took a decidedly dovish tone on future rate hikes.

Investors are also tracking
the dollar, which hit a six-week low against the euro, weakening in the
wake of recent dovish comments from U.S. Fed Chair Janet Yellen. But
it’s not just the euro that’s making gains against the USD, Asian
currencies are also getting a big boost. The Australian and New Zealand
dollar are near nine-month peaks. The Dollar Index is down 3.7% for
March.

Initial jobless claims
increased by 11,000 to 276,000 in the week ended March 26, the highest
since the end of January. Jobless claims have been below 300,000, a
level associated with a healthy labor market, for 56 consecutive weeks.
That’s the longest streak since 1973. In a separate report, global
outplacement consultancy Challenger, Gray & Christmas said
U.S.-based employers announced 48,207 jobs cuts this month, down 21.7
percent from February. On Friday, investors will turn their eyes to the
key March jobs report. The consensus guess is that the economy added
205,000 jobs in March.

Consumer prices in the euro-area remained
in negative territory in March, weighed down by a sharp fall in the
energy sector. Eurostat’s flash estimate showed annual inflation of
minus 0.1% against the previous month’s reading of negative 0.2%.

China could be downgraded at S&P.S&P
cut its outlook for China’s sovereign credit rating to negative from
stable but kept its rating at AA-. The rating agency referred to
“economic imbalances in China that are unlikely to diminish at the pace
we previously expected.” Just a note here: AA- is still a strong rating.

India hopes to receive one
of the first loans issued by the China-led Asian Infrastructure
Investment Bank later this year, as it looks to raise $500 million for
solar power projects from the newly created lender. The AIIB, which has
authorized capital of $100 billion, plans to join global clean-energy
initiatives, and could fund eco-friendly investment projects to avoid
allegations of promoting pollution.

Argentina’s Senate
has approved measures that will allow the government to pay billions of
dollars to American hedge funds, a critical step toward settling a
14-year old legal battle. In February, the Macri administration reached a
series of agreements with investors including Paul Singer’s NML
Capital, Montreux Partners, Dart Management and a group of Italian
investors, totaling more than $10 billion in payments.

These funds
swooped in after Argentina defaulted and bought bonds for pennies on the
dollar, and then they sued Argentina, hoping to cash in at full face
value; that didn’t happen but apparently the new deal provides enough
profit to stop fighting. Argentina is expected to go on a road show in
April to court foreign investors. The country will try to sell up to $15
billion in bonds to pay for the February agreements.

Time now for “Bankers Behaving Badly”;
today’s edition takes us south of the equator to Brazil. Brazilian
prosecutors on Thursday charged Joseph Safra, the world’s richest
banker, in connection with an alleged scheme to pay bribes to government
officials in return for waiving tax debts. Safra is a
Lebanese-Brazilian billionaire, whose fortune is estimated at about $18
billion: The Safra family owns Banco Safra, and he controls a banking
and financial conglomerate that operates in 19 countries.

In a
statement, prosecutors said that Safra had knowledge of a 2014 plan by
executives at his Banco Safra SA to pay $4.2 million in bribes to
federal tax auditors. The accusation is based on tapped phone calls
between a Banco Safra executive, João Inácio Puga, and tax officials.
Safra was not involved in the bribery negotiations, but the recording
show Puga reported to Safra on the bribery talks.

Lenders to the oil and gas industry
have been extraordinarily lenient amid the worst downturn in decades,
allowing indebted companies to survive a little while longer in hopes of
a rebound in oil prices. But the screws are set to tighten just a bit
more as the periodic credit re-determination period finishes up. Banks
reassess their credit lines to oil and gas firms twice a year, once in
the spring and once in the fall.

While the lending arrangements vary
from bank to bank and from borrower to borrower, lenders largely punted on
both re-determination periods last year, providing a grace period for
drillers to wait out the bust in prices. But oil prices have not
rebounded much since the original crash in late 2014. Time could run
out for companies that have been hanging on by a thread.

When oil was at $100 a barrel, debt was easy to get. According to The Wall Street Journal, the net debt of publicly-listed global oil and gas companies grew threefold over the
past decade, hitting a high of $549 billion last year.

About 51 oil and
gas companies from North America have filed for bankruptcy since early
2015, but there are 175 more that are in danger of not being able to
meet debt payments. For context, 62 oil and gas companies fell into
bankruptcy during the financial crisis in 2008 and 2009. Companies
struggling with debt payments and shrinking revenue could see the taps
shut off or at least reduced.

Some analysts see cuts to credit lines on
the order of 20 to 30 percent. Oil & Gas 360 says that banks are
also marketing their troubled debt to hedge funds, marking down
distressed debt to cents on the dollars. Hedge funds could buy up
discounted debt in hopes of repayment.

Meanwhile, although the credit markets are squeezing drillers, equity markets remain open, at least to some. Reuters reported last
week that about 15 companies have announced new equity offerings in
2016. The credit re-determinations are currently wrapping up and the
details of many of them could soon be released. The deeper banks cut
their credit facilities, the more likely struggling oil and gas
companies could be forced into bankruptcy.

General Electric
formally asked to be released from supervision by the Federal Reserve,
saying it has sufficiently shrunk its once-massive financial services
arm so it would no longer pose a systemic threat to the banking system.
Being categorized as a “systemically important financial institution,”
or SIFI, required GE to submit to financial supervision by Fed staff and
rein in leverage, two factors in GE’s decision last year to exit most
of its lending business, which until recently provided as much as half
of the conglomerate’s profits.

In a filing sent Thursday to the
Financial Stability Oversight Council, GE said it had cut its total
assets in the financing division by more than half, eliminated the
majority of its U.S. operations, and cut the company’s ties to the rest
of the financial system that had led to its receiving the SIFI
designation.

Tesla’s Model 3 debuts later today. The
Model 3’s release is highly anticipated, as the vehicle has a base
price of $35,000, making it Tesla’s first vehicle that’s cheap enough to
be considered “mass market.” The automaker will unveil the car this
evening at an event at its headquarters in Southern California. But
buyers were lined up at the Tesla store in Santa Monica today to put
down thousand dollar deposits on a car they haven’t even seen yet.

China’s Anbang Insurance Group
has abandoned its bid for Starwood Hotels & Resorts, paving the way
for Marriott International to buy the Sheraton and Westin hotels
operator. Anbang and Marriott had gone back and forth, bidding up shares
in Starwood; last week Anbang made an offer of $14 billion, which
looked like it would beat Marriott’s offer of $12.2 billion.

When it comes to soccer in the United States,
women rule. The women’s national team has won 3 World Cup championships
and 4 Olympic championships; the men’s national soccer team…, yea, not
so much. Five players on the women’s team filed a federal complaint
yesterday, accusing U.S. Soccer (the governing body and paymaster) of
wage discrimination because, they said, they earned as little as 40
percent of what players on the United States men’s national team earned
even as they marched to the team’s third world championship last year.

The five players, some of the most prominent women’s athletes in sports,
said they were shortchanged on everything from bonuses to appearance
fees to per diems. The case was submitted to the Equal Employment
Opportunity Commission, the federal agency that enforces civil rights
laws against workplace discrimination.

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